Empowered to Talk to Your Attorney
By Ken Moscaret, Moscaret Consulting, Inc.
For small business owners, knowledge equals power in the marketplace. Remember before the Internet when a car buyer walking into a dealership was nearly always at a bargaining disadvantage with the salesperson? The car buyer knew nothing about the dealer’s internal pricing, or how the dealer arrived at that pricing. That made car buying painful. Now, with the proliferation of auto research websites, “insider” information is readily available, buying power has shifted to purchasers, and car dealerships have had to change their ways in order to accommodate more savvy buyers.
When a business owner hires an attorney, she needs to know what to say to her attorney, and how to say it the right way. Although she may not have a law license, a business owner needs to feel she is on an equal footing with her attorney in a mutual business relationship. Too often that doesn’t happen. In my experience, too many business owners don’t understand what their attorneys really do for them behind the scenes, especially in handling lawsuits, and how much legal services really cost.
It isn’t just important for clients that they understand the entire process; it’s important for their attorneys, too. When clients feel frustrated from lack of knowledge, trouble can ensue in the attorney-client relationship. Business owners can unknowingly set themselves up for disappointment by having unrealistic expectations of their attorneys. Attorneys may get blamed, even when it’s not really their fault.
Here are some potentially-sensitive “relationship issues” in any attorney-client relationship where business owners need to feel empowered when they talk to their attorneys:
1. Attorney Retainer Agreements
The terms and provisions in the basic engagement agreement need to be balanced to ensure fairness to both client and attorney.
2. Attorney Fee Structures (Hourly vs. Non-Hourly)
Although most attorneys charge straight hourly rates for their services, there are situations where fixed fees, blended hourly rates, full contingency fees, or partial-contingency-plus-reduced-hourly fees make sense. That way, clients and attorneys share risk together.
3. Legal Price Lists
Business owners need reliable cost estimates in advance outlining how much their attorneys are likely to charge them for handling the dozens of expensive tasks that are involved in any lawsuit, which typically cost thousands of dollars each. In other words, not just the cost of the entire case, but its component parts step-by-step.
4. Case Budgets
Every business runs on a budget. Legal engagements, including lawsuits, should be no exception. Case budgets are a forward-looking planning tool for both clients and attorneys.
5. Case Valuation
Business owners need to be able to conduct an ongoing “cost-benefit” analysis in any lawsuit, where they measure the ongoing “value” of the litigation against the cost of continuing to pay legal fees to litigate. That means they have to understand how much a lawsuit is really “worth” in economic terms.
6. Attorney Billing Rules
The courts have said that there are items that attorneys can and cannot bill their clients for. Business owners should be aware of those “do’s and don’ts” of attorney billing. However, billing rules need to fair to attorneys, too.
Bottom line, legal fees can be expensive for business owners. It’s far better for the overall attorney-client business relationship for clients to go into the process with their eyes wide open and not be unpleasantly surprised later on.
Ken Moscaret is an attorney and courtroom expert witness in California and Seattle. He testifies about attorney-client relationship issues. Mr. Moscaret created myLawCoach (www.myLawCoach.com), the first-ever online “relationship management” site to help small business owners navigate the dollars-and-cents business aspects of their attorney-client relationships.